Implementing R12 E-Business

Tax for US Sales & Use

Lisa Meier
Carl Rubin

Agenda
Overview
Setting Up Sales Tax for a State
Create a Tax Regime
Create a Sales Tax within a Regime
Create a Tax Status
Create Tax Rates
Create a Tax Jurisdiction
Define Tax Accounts
Define the Tax Determination Process Defaults
Make the Tax Available for Transactions

Overview
E-Business Tax uses the following hierarchy to
determine the recovery rate
1. Rule exists the Tax Determination Process?
2. Was a Recovery Rate assigned to the Tax
Rate?
3. Is a Recovery Rate defined for the Tax?
In the case of multiple recovery rates, a Tax Rule will
be required in the Tax Determination process
Should none of the three conditions above exist,
then a recovery will not be calculated.

Setup Procedure
1. Create a Tax Regime
1. The Tax Authority responsible for collecting
taxes, usually within a country
2. Create a Tax within the Regime
3. Create a Tax Status
1. A tax category such as Define a Tax Rate
2. Rate in effect for a specific time period
4. Create a Tax Jurisdiction
1. Geographical area tax is applied
5. Define Tax Accounts
6. Specify the Tax Determination Process Defaults
1. The criteria used by the system to determine
whether or not to apply a tax
7. Make the Tax Available for Transactions

Create a Tax Regime

Log into Oracle Tax Manager Responsibility and Navigate to the Tax
Regimes screen. Click the Create button to create a new Tax Regime.

Create a Tax Regime

Enter the Tax Regime Code and Name.

Note:
Fields marked with an asterisk are required.
HTML pages in Oracle rely heavily on the use of list of values.
Whenever you see the magnifying glass indicating an LOV exists, it is
recommended to select the data from the list as it just typing it in may
not save correctly.

Create a Tax Regime

Uncheck the Allow Tax Recovery; Check Allow Tax Exemptions and
Allow Tax Exceptions boxes.
Enter in your default information for Tax Currency; Minimum
Accountable Unit; Rounding Rule and Tax Precision. Then click
Continue.

Create a Tax Regime

Link the Regime to the Internal First Party that creates documents.

Create a Tax Regime

Confirmation that the tax regime was successfully created.

Create a Tax Regime

Search results for newly created tax regime.

Create a Tax within the

Regime

To create the tax, navigate to the taxes tab and click the create button

Create a Tax within the

Regime

Enter in the Main Information for the tax then Click the Show Controls
and Defaults link.

Create a Tax within the

Regime

Scroll down to the Tax Exceptions/Exemptions Controls section to

define these controls..

Create a Tax within the

Regime

Continue to click the Apply button until you receive the confirmation
that the Tax has been successfully created.

Create a Tax Status

Navigate to Tax Statuses and click on the Create button.

Enter the Main Information. Note that the Default Controls section has
pre-populated from the Tax and Regime setups that were done earlier.
Click the Apply Button.

Create a Tax Status

Confirmation that the Tax Status has been successfully created.

Define a Tax Rate

Navigate to Tax Rates and click on the Create button.

Select the and enter the tax rate data in the Create Tax Rate fields.
Enter the tax rate percentage amount in the Percentage Rate field then
click on the Rate Details icon.

Define a Tax Rate

Enter the Tax Name.
VERY IMPORTANT
Be sure you check
the Internet
Expenses Enabled
box. Once the status
is saved this cannot
be changed.
Scroll to the bottom
and check Set as
Default Rate then
enter the effective
from date.
Click Apply

Define a Tax Rate

Continue clicking Apply until confirmation message is

received.

Create a Tax Jurisdiction

Navigate to Tax Jurisdictions and click on the Create button.

Select and Enter the Tax Jurisdiction Information. Please note the Set
as default Tax Jurisdiction has been set. At least one jurisdiction must
be defaulted for each tax. Click apply.

Create a Tax Jurisdiction

Confirmation that the Tax Jurisdiction was successfully created.

Define Tax Accounts

Navigate to the Taxes tab and click the Update icon.

Define Tax Accounts

Select your ledger then click the Create button.

Select your Operating Unit and the GL Code for Click Apply.

Define Tax Accounts

Continue to click Apply until the confirmation message is received.

Define Tax Accounts

Continue to click Apply until the confirmation message is received.

Specify Tax Determination

Process Defaults
Seven Steps used in the Tax Determination Process
1. Determine Place of Supply
2. Determine Tax Applicability
3. Determine Tax Registration
4. Determine Tax Status
5. Determine Tax Rate
6. Determine Taxable Basis
7. Determine Tax Recovery Rate (if the tax is a
Recoverable Rate)
You must define a default for each step of the tax
determination process before the tax can be made
available for transactions.

Specify Tax Determination

Process Defaults

Navigate to Tax Rules. Enter the Configuration Owner, Tax Regime

Code and Tax for which you wish to specify process defaults. Click
Go.

Specify Tax Determination

Process Defaults

If you scroll down, you will see that Determine Tax Status and Determine
Tax Rate show the defaults enabled when we created those items.

Specify Tax Determination

Process Defaults

We are not going to do anything with the Direct Tax Rate Determination.
That is used for data migrated from 11i
The first default we need to set will be Determine Place of Supply
Click on the Pencil icon for that default.

Specify Tax Determination

Process Defaults

Select Ship To as the Rule Type Default then click Apply.

Specify Tax Determination

Process Defaults

Because the rule is applicable most of the time, click on the pencil icon
for Determine Tax Applicability and click Apply. The Tax is now
Applicable.

Specify Tax Determination

Process Defaults

Click on the Determine Tax Registration icon and select Bill From Party then
apply.

Select Standard_TB for the Determine Taxable Basis default. This will utilize
the Standard Taxable Basis which calculates tax based upon line amount.

Click on the Calculate Tax Amounts icon and select Standard_TC to calculate
taxes using the standard tax calculation. This will take the line amount and
multiply it by the tax rate.

Make Tax Available for

Transactions

Search for the Tax then click on the Update icon.

Make Tax Available for

Transactions

Check the Make Tax Available for Transactions box and click Apply.

Make Tax Available for

Transactions

You may encounter a warning that the tax does not have an exchange
rate type. Just click Yes and you will receive the confirmation that the
Tax was successfully updated.

Make Tax Available for

Transactions

Confirmation that update to enable tax was successful

Considerations for 3rd Party

Integrations
In cases where a company has nexus in multiple tax
jurisdictions they may wish to install a 3rd party software to
help manage the ever changing landscape of Sales and Use
taxes. Here are the steps needed to accomplish this:
Vertex and Taxware integrations are support in R12
Requires separate licensing
Integration Requirements:
Installing Scripts
Modifying Profile Options
Create lookup codes (tax exemption reasons)
Create provider specific tax regime and taxes
Install Client side tax software
Load tax rates

Considerations for 3rd Party

Integrations

Summary/Questions
This was a simplistic example of how to set up US Sales Tax in EBusiness tax.
As with all projects it is recommended that the initial setups be created
in a test or development instance and that all tax scenarios are fully
tested prior to deploying to production.
Business requirements are essential prior to starting implementation
because certain items cannot be changed once a transaction has
occurred.
This simple setup as described should take 20 30 hours to complete.